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Advancing Further Into the Future

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Advancing Further Into the Future ADVANCING FURTHER INTO THE FUTURE We aim to be a corporate group that invigorates Three pillars forming the code of conduct that the Group always keeps in mind Kyushu, Japan, and Greater Asia with safety and service as its foundation. JR Kyushu was created following the breakup and privatization of Japanese National Railways in 1987. Since then, we have not only worked steadily to build a strong railway business, but have also leveraged the power of the Group, using our businesses for active city-building (com- Integrity munity enhancement and vitalization). Along the way, we have established three pillars that form our code of conduct that each and every employee of the Group can always keep in mind and use as a touchstone. These are Integrity, Growth and Evolution, and Local Community Invigoration. With a focus on these three pillars and the future, we will strive to achieve “What the JR Kyushu Group Aims To Be”—“A corporate group that invigorates Kyushu, Japan, and Greater Asia with Growth and Local Community safety and service as its foundation.” Evolution Invigoration INTEGRATED REPORT 2019 KYUSHU RAILWAY COMPANY 2 Kokura Developing Our Businesses, Centered on the Railway Business, with Our Base in Kyushu Hakata Fukuoka Prefecture Saga Prefecture JR Kyushu was established as a group centered on the railway business, with a Oita Prefecture Oita railway network that covers all of Kyushu. In addition, in non-railway businesses we have expanded our business fields. These initiatives are centered on opera- Nagasaki tions that are highly compatible with the railway business, such as the resi- Prefecture dential building, construction, passenger ship, hotel, and station building businesses. Moving forward, we will continue to contribute to the sus- Kumamoto Nagasaki tainable development of Kyushu through city-building initiatives Kumamoto Prefecture that leverage the distinctive characteristics of local communi- ties, centered on safe and secure mobility services. Miyazaki Prefecture Miyazaki Kagoshima-Chuo Kagoshima Prefecture *1 Source: Future estimated population of Fukuoka City (National Institute of Population and Social Security Research) *2 Source: Internal investigation. Estimates based on statistics from the Policy Research Institute for Land, Infrastructure, Transport and Tourism Conventional lines regarding inbound tourism demand for all of Japan. Assumes that the recent trend in the percentage of inbound travelers who visit Kyushu will Shinkansen line remain the same in the future Expected increase in population of Fukuoka Expected increase in number of inbound overseas Declining population in Kyushu, where the pace Increasing natural disasters in Kyushu City*1 tourists visiting Kyushu*2 of the decline exceeds that in the nationwide Index (2015 = 100) Index (2015 = 100) population Index (2015 = 100) Fukuoka City 23 wards of Tokyo Natural phenomena causing notable damage Total for ordinance-designated cities Nationwide Kyushu in recent years Effect of runway 110 180 100 increase at Fukuoka July 2012 Heavy rain in northern Kyushu Airport April 2016 Kumamoto earthquakes July 2017 Heavy rain in northern Kyushu July 2018 Heavy rain 90 ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ INTEGRATED REPORT 2019 KYUSHU RAILWAY COMPANY 3 Steadily Improving Results in Accordance with FY2019/3 Consolidated the JR Kyushu Group Medium-Term Business Plan Operating Revenues The Group’s first medium-term business plan was G-vision’03, which ¥440.3 billion we formulated in 2001. We have now completed five medium-term business plans, up to the JR Kyushu Group Medium-Term Business Plan 2016-2018, for which FY2019/3 was the final year. In this way, we have steadily improved our results. In addition, during this period we com- pleted two major projects—the full opening of the Kyushu Shinkansen and the opening of JR Hakata City in 2011. In 2016, we listed our stock on the Tokyo Stock Exchange and the Fukuoka Stock Exchange. ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ Medium-TermBusinessPlan Medium-TermBusinessPlan Medium-TermBusinessPlan Medium-TermBusinessPlan Medium-TermBusinessPlan G–vision’ – DASH Tsukuru – Major events 2004 2007 2011 2015 2016 2017 Opens Amu Plaza Makes the current JR KYUSHU Begins operation of the entire Kyushu Opens JR Oita City Is listed on the Tokyo Stock Makes Caterpillar Kagoshima in the DRUG ELEVEN CO., LTD. Shinkansen line in Oita Station Exchange, First Section, and Kyushu Ltd. Kagoshima-Chuo a subsidiary Opens JR Hakata City in Hakata Station Fukuoka Stock Exchange a subsidiary Station Building Opens JRJP Hakata Building INTEGRATED REPORT 2019 KYUSHU RAILWAY COMPANY 4 The Key Strategy Review of the Previous Medium-Term Business Plan Build robust railways that Aiming to Be a Kind and Robust Corporate provide the foundation for Group Involved in Comprehensive City-building all our businesses We implemented the JR Kyushu Group Medium-Term Business Plan Priority Items 2016–2018, covering the period from FY2017/3 to FY2019/3. During Improving transportation services this three-year period, we aimed to further accelerate the creation of a (improving train operating condition informa- strong management base that allows us to continuously contribute to tion, etc.) the well-being of all the people related to the JR Kyushu Group includ- Increasing Shinkansen revenues through ing our customers, business partners, employees, and shareholders by higher online sales, diversifying sales channels becoming a kind and robust corporate group involved in comprehen- for the JR Kyushu Rail Pass, etc. sive city-building. Expansion of smart support stations* (3 train lines) As a result, we were basically able to accomplish initiatives that Introducing energy-saving rolling stock were aligned with the three key strategies: “Build robust railways that (DENCHA, etc.) provide the foundation for all our businesses,” “Actively promote in city-building in the Kyushu area,” and “Take on the challenges of new * A service under which support center operators offer guidance to customers through intercoms installed in businesses and expanding outside the Kyushu area.” stations where personnel are not always assigned. In In the railway business, serious disasters occurred almost every addition, we have established a system under which we use multiple cameras installed in stations to watch over year, but revenues from railway transportation increased and reached customer safety, with support staff providing assistance at a record high for two consecutive years. In non-railway businesses, JR stations as necessary. Hakata City, which was opened in 2011, continued to post solid results. In addition, we recorded growth in tenant sales at other main station buildings. Furthermore, we opened the JRJP Hakata Building, which was our first full-scale office development, and Ropponmatsu The Key Strategy 421, which we advanced as our first city-building project outside of the areas around our railway lines. Actively promote in city- In these ways, over the three-year period we were able to buildingsteadily in the Kyushu area implement the three key strategies and to make steady progress toward what we aim to be. Priority Items Opening JRJP Hakata Building and Ropponmatsu 421 Achievng steady growth in key businesses (station buildings, condominiums, rental apart- ments, hotels) INTEGRATED REPORT 2019 KYUSHU RAILWAY COMPANY 5 Positioning of the New Medium-Term Business Plan JR Kyushu Group Medium-Term Business Plan 2019–2021 JR Kyushu Group 2030 Medium-Term Toward the Next Growth Stage Long-Term Business Plan Toward the Next Growth Stage Priority initiative 1 Vision 2016–2018 Further strengthen our management foundation In the previous medium-term business plan, the target management indi- cators were operating revenues of ¥400.0 billion and EBITDA* of ¥78.0 Priority initiative 2 billion. We were able to substantially exceed both of these figures due to Further strengthen our earnings power in key businesses favorable revenues from railway transportation and results in the con- struction segment. Build sustainable railway services by improving earnings However, the Group’s management environment is expected to Pursue further earnings change even more dramatically than it has in the past due to technical Enhance productivity opportunities innovation and the emergence of new business models. Considering the opportunities and threats that accompany these changes, we will need new viewpoints that are not limited to extensions of existing approaches, We will contribute Implement strategic city-building initiatives in the regions to the sustainable and we will need to develop countermeasures to facilitate the sustainabil- around our business areas development of ity of our businesses. To that end, we recognized that we needed a lon- Kyushu through Aim to be a kind Increase regional value city-building initia- ger-term perspective, and on that basis we formulated the 2030 and robust corpo- Implement active busi- and creating communities ness development in the tives that leverage rate group involved through the development Long-Term Vision. Fukuoka Metropolitan the distinctive char- in comprehensive of areas surrounding Area acteristics of local We considered the issues recognized during the period- of the previcity-building stations ous medium-term business plan, and we drew on a backcasting perspec- communities, cen- tered on safe and tive starting with the long-term vision. On that basis, we formulated the secure mobility JR Kyushu Group Medium-Term Business Plan 2019–2021.
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